An Enterprise Investment Scheme, or EIS, is one of the most exciting investment products available. It allows
investors to be part of some of the most forward-thinking new companies around. EIS operate like a
partnership between the investors and the Company allowing a start-up business to secure funding, with
benefits and large potential gains for the investor too. Here we will take a look at what EIS are and how to
invest.
What Is An EIS Fund?
An EIS is a scheme which allows higher-risk, younger businesses to raise finance by incentivising investors. It’s
run by HMRC and companies need to qualify to be eligible for EIS. Some of the benefits for investors include
tax relief. An EIS is not just an investment, it generates capital for a Company to grow, which in turn should
lead to returns for the investors. Take a look at this list of the top EIS funds you should know about.
Fantastic Opportunities For Profit
All investments carry a certain level of risk. Start-up companies tend to be riskier investments as the
businesses are in their infancy. However, with an EIS it means you will be investing in different companies
across different sectors. This means your portfolio could benefit from additional diversity. Many new
companies are starting in huge growth sectors every day; including pharma, technology and agriculture. EIS
are generally considered to be long-term investments so any returns may take several years to materialise.
How Can You Invest In EIS?
You will need to work with an independent advisor or investment partner. You can then have the opportunity
to invest in shares in an EIS fund. Investing in an EIS allows you to invest in companies when they are small,
therefore increasing the returns should the Company become a success. To learn more about EIS
opportunities, particularly within the UK technology sector, take a look at Oxford Capital; who work with
high-net-worth individuals and can provide the required guidance if you are considering this.
Tax Benefits Of EIS
When investing in EIS funds there are several tax benefits available. Capital gains deferrals and income tax
relief are the two main benefits. Currently, investors can claim 30% income tax relief and if you hold EIS shares
for at least three years, and meet certain conditions, and gains made will be free from capital gains tax. There
are also tax benefits from loss relief and inheritance tax relief. By investing in early-stage businesses it carries
a certain degree of risk. Along with this higher risk, there is the potential to make returns as you are investing
in a business in its infancy.
Other Benefits Of EIS
There is a wide range of investment opportunities available under EIS. Almost any type of business can qualify
for the scheme so you can choose which you might like to invest in. You could opt for an area that you are
familiar with but in new geographic regions, or you could invest in an area completely new to you. EIS gives
you a choice where traditional stocks and shares do not. You can choose which early-stage companies are
most suitable for your requirements.
In turn, this choice has knock-on benefits for your portfolio. By investing in different companies you are
diversifying your investments. The potential returns from investing in a successful start-up Company can be
significant, so by spreading your investments you can mitigate risk should one of the companies not perform
as well as expected.
Final Things To Consider
Being a key part of a business from the beginning is an exciting journey to be part of. You can be a part of the
Company’s future, and its success and ride the wave of success and challenges. A risk-taking attitude is
needed for EIS investments and a specialist investment manager can help to manage and maximise your
investments.